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EDA Minutes 08-12-2020MINUTES REGULAR MEETING - ECONOMIC DEVELOPMENT AUTHORITY (EDA) Wednesday, August 12th, 2020 — 6:00 p.m. Mississippi Room, Monticello Community Center The EDA meeting was held both remotely and in-person. Commissioners Present: Steve Johnson, Bill Tapper, Jon Morphew, Tracy Hinz, 011ie Koropchak-White, Lloyd Hilgart, and Jim Davidson Staff Present: Jim Thares and Angela Schumann 1. Call to Order Steve Johnson called the Regular Meeting of the EDA to order at 6:00 p.m. 2. Roll Call 3. Consideration of Additional Agenda Items None. 4. Consent Agenda BILL TAPPER MOVED TO APPROVE THE CONSENT AGENDA. OLLIE KOROPCHAK-WHITE SECONDED THE MOTION. MOTION CARRIED, 7-0. a. Consideration of Approving Regular Meeting Minutes — July 8, 2020 Recommendation: Approve Regular Meeting Minutes — July 8, 2020. b. Consideration of Approving Workshop Meeting Minutes — July 8, 2020 Recommendation: Approve Workshop Meeting Minutes — July 8, 2020. c. Consideration of Approving Regular Meeting Minutes — July 22, 2020 Recommendation: Approve Regular Meeting Minutes — July 22, 2020. d. Consideration of Approving Payment of Bills Recommendation: Approve payment of bills through July, 2020. Regular Agenda 5. Consideration of Amendment of Small Business Emergency Grant Agreement Template Angela Schumann noted that the item was a housekeeping item for the Small Business Emergency Grant program. She noted that there is a better understanding of the limitations and requirements of CARES Act funding that is being used for the EDA's program. The EDA Attorney recommended minor changes to both the grant guidelines and the grant agreement. Schumann summarized that the changes included that the funds could not be used for expenses or similar expenses already paid by other CARES Act Economic Development Authority Minutes — August 12th, 2020 Page 116 funding and that the funding cannot be used toward property taxes. Schumann also added that staff have created a tracking form that would be sent to awarded business owners to list their expenses and to sign a statement understanding how the funds can be used. Bill Tapper asked for clarification if an additional $100,000 was awarded to the EDA's grant program through the City Council from CARES Act funding and if there was a deadline for funds to be allocated. He also requested a revision to the grant guidelines that would allow already awarded businesses the opportunity to apply again for additional funding for any grant funds still in the program. Schumann stated that the City Council allocated $200,000 in CARES Act funding to the EDA to use for the Small Business Emergency Grant Program. Thares added that 40 total grants could ultimately be awarded. To date, 17 have been approved equal to $85,000 worth of funding. It was noted that one additional grant consideration was on the EDA's agenda for the meeting. Thares explained that a lot of businesses are not aware of funding opportunity, even though staff have made good publication efforts including having an article in the paper, sending business owners letters, and through word-of-mouth. Thares also added that staff have come up with a list of businesses that are likely to be eligible and possibly interested and plan to contact them to explain the opportunity to them. Thares stated that the goal of the program was to use up all of the $200,000 in funding. Thares noted that funds would need to be considered by the EDA no later than the second meeting in October and expended by the City Council in early November, 2020. Tapper reiterated his question about changing the grant guidelines. Thares noted it would be a policy question. Lloyd Hilgart explained that he would like to see if the city had any need for the funds prior to changing the grant guidelines. 011ie Koropchak-White asked if the program was marketed to the Chamber of Commerce for promotion. Schumann confirmed and added that they also received a $5,000 grant. Tapper also requested that the guidelines be adjusted to accommodate fewer and more employees than the 2 through 25 the grant suggests. Tapper noted that the grant on tonight's meeting for Evolution Taekwondo only has one full-time and one part-time staff. He also noted that Chatter's Restaurant was above the employee count. Thares explained that he has reviewed other cities emergency grant programs and finds ours comparable. Tapper noted that he did not want to deter people from applying if they did not think they qualified. Jon Morphew asked whose responsibility it is for checking to make sure that they are not "double-dipping" and using other forms of funding for the same or similar expenses. Schumann noted the importance of approving the amended guidelines and grant agreement. She noted that successful applications would require the business owner to certify that they understand the requirements of the program and that they would attach Economic Development Authority Minutes — August 12th, 2020 Page 2 16 their expenses with a narrative of how the funds were used. Schumann also explained that the City's Auditor's will ensure that these expenses would be used appropriately. The signed statement by the business owner offers protection to the EDA and City, while putting responsibility on the business owner for use of funds. Schumann also added that in the application it asks the applicant if they requested and/or received other forms of financial assistance. The EDA generally believed leaving the guidelines as proposed by staff was adequate with no additional changes per discussion by the members. Schumann pointed out the relatively small amount of the grant and the ease of providing separate qualifying expenses for the use of the EDA's grant funds. JON MORPHEW MOVED TO APPROVE AN AMENDMENT OF SMALL BUSINESS EMERGENCY GRANT GUIDELINES AND AGREEMENT TEMPLATE. TRACY HINZ SECONDED THE MOTION. MOTION CARRIED, 7-0. 6. Consideration of Approving Small Business Emergency Grant Agreements in the Amount of $5,000 to Evolution Taekwondo Monticello LLC to Mitigate COVID-19 Economic Impacts Steve Johnson asked if this individual grant fell under the EDA's recent amendment to the guidelines. Jim Thares confirmed. Thares stated that staff reviewed the grant request submittal and noted that the applicant is eligible for the $5,000 grant. The application indicates that the funds would be used to cover lease payments. They have one full-time employee and one part-time employee and fall well under the revenue maximum. BILL TAPPER MOVED TO APPROVE THE SMALL BUSINESS EMERGENCY GRANT AGREEMENT BETWEEN THE EDA AND EVOLUTION TAEKWONDO MONTICELLO LLC (INCLUDING THE EXCEPTION RELATED TO EMPLOYEE HEAD COUNT FOR THE BUSINESS) IN THE AMOUNT OF $5,000 TO MITIGATE COVID-19 ECONOMIC IMPACTS. OLLIE KOROPCHAK-WHITE SECONDED THE MOTION. MOTION CARRIED, 7-0. 7. Consideration of Accepting 2020 Hospitality and Lodging Demand Study Completed by Hospitality Consulting Group, Excelsior, MN Jim Thares noted that Steve Sherf from Hospitality Consulting Group, completed an abbreviated Hospitality and Lodging Demand Study. The study was condensed due to the impacts of COVID. Thares noted the history of the contract with Sherf and noted that the completed study validates the 2015 study. Sherf introduced himself and provided some background on the study. He noted that prior to the study, he analyzed the competitive hotel market, updated the economic demographic data, and was in the process of conducting interviews with 4 to 5 business leaders. Sherf noted that he did not get to complete the utilization projections due to the Economic Development Authority Minutes — August 12th, 2020 Page 3 16 COVID-19 shutdown interruptions and the EDA's desire to close-out the contracted work. Sherf stated that he believes the condensed study would provide a good base to the EDA and help inform hotel development prospects. Sherf noted that there has not been a whole lot of change in the market since 2015. The findings in the 2015 study was for the most part accurate for today. Sherf provided a brief overview of the findings and preliminary conclusions of the study. Jim Davidson asked if there was a sense for the quality, surroundings, and style of meeting space that was desired in Monticello. Sherf noted that generally the meeting space had some out of town attendees. The Best Western was adequate, but there was a desire for something newer and more technologically advanced. Morphew asked about if a hotel were developed in Monticello if it would need a restaurant to support it. Sherf noted that it would be mutually beneficial, especially if the restaurant were close to the hotel. Sherf was unsure if a new restaurant in Monticello could survive after the pandemic given the current situation. He noted that being near an 80 -room hotel, would be sufficient to support a restaurant if it could capture all of it. Bill Tapper asked for an example of the type of hotel that would be ideal for Monticello. Tapper suggested a Hampton Inn. Sherf agreed and added that previously they discussed the development of a Grand Stay, which he continues to express desire for that type of hotel in Monticello. Hamptons are typically higher quality and higher rates. He recommended Hampton, Holiday Inn Express, Marriot Fairview Inn, and Grand Stay. Grand Stay has a lot of local and regional recognition, which would help it pull some guests traveling along the interstate, but other nationally recognized hotels would help pull from the interstate travelers more than a regional franchise. Steve Johnson observed that in the 2015 study it had noted that approximately a market capacity of 50 to 60 new rooms could be introduced to the market and be sustained. He wondered if that number was constant or expanded. Sherf noted that due to the current economics, developers are looking at constructing larger hotels. He believed that it would be likely that a 60 to 80 -unit hotel would be the right size for Monticello. Johnson asked if that would be in the realm of a Hampton Inn or a Holiday Inn. Sherf confirmed but believed they would not go below 80 -units. Tapper asked if there was a right time to finish the study. Sherf stated that the right time to finish the study is when the market stabilizes. He further noted that if a 2020 were provided to a prospective developer (using 2019 data), a hotel would likely not be open until 2021 or 2022 because of the development time. Sherf noted that they could issue a 2020 report under the assumption the market will return to the 2019 conditions. Sherf noted that he would not recommend finishing the study unless the City had a developer that was serious about developing in the city and to gather some information from them to see what information they need. Economic Development Authority Minutes — August 12th, 2020 Page 4 16 Johnson noted that a hotel prospect was the reason for the start of the study, but it was unclear whether they were still interested due to the current situation. Sherf noted that a hotel developer would be able to find 90 percent of the information they need in the summary report. Sherf noted often after review of the study, a feasibility study is desired by the developer for their lender. He recommended then structuring an engagement that would meet the lenders requirements. Johnson noted that information could be used by the City for comprehensive planning and used by prospective developers or lenders. Tapper asked Sherf for the impact of more people working from home and the need for meeting space. Sherf noted that business travel will likely be permanently changed and there will be less frequent meetings and travel. The leisure market seems likely to come back full tilt and make up for lost time. Sherf believed commercial demand would take time to recover, if ever. Sherf explained that there are some future developments that are proposed nearby that could also benefit Monticello. BILL TAPPER MOVED TO ACCEPT THE HOSPITALITY AND LODGING DEMAND STUDY. LLOYD HILGART SECONDED THE MOTION. MOTION CARRIED, 7-0. 8. Consideration of Adopting EDA Resolution #2020-09 Authorizing the 2021 Special Benefit Tax (HRA Levy) in the Amount of $366,300 and Setting the 2021 EDA Revenue and Expenditures Budget in the Amount of $371,300 Jim Thares noted that this was the EDA's annual consideration for the HRA Special Benefit Levy for the EDA budget and consideration for the 2021 budget. Discussion occurred during the July 8, 2020 meeting regarding this item and those thoughts were reflected in the recommendation for tonight's consideration. The levy for 2021 is proposed at $366,300. Thares also noted the proposed 2021 EDA General Fund budget is proposed to be $371,300. This is $5,000 more than the levy amount due to interest earnings General Fund cash balances received throughout the year. Thares pointed out that contrary to the staff report, the City Council would consider the preliminary levy including the EDA/HRA levy at its August 24, 2020 meeting. Thares noted that the levy increase is proposed at 2.93 percent and reflects the EDA's work programs. BILL TAPPER MOVED TO ADOPT EDA RESOLUTION #2020-09 AUTHORIZING THE LEVY OF A 2021 SPECIAL BENEFIT TAX (HRA LEVY) PURSUANT TO MINNESOTA STATUTES, SECTION 469.033, SUBDIVISION 6 IN THE AMOUNT OF $366,300 AND APPROVING AN EDA REVENUE AND EXPENDITURES BUDGET IN THE AMOUNT OF $3711300 FOR FISCAL YEAR 2021. JIM DAVIDSON SECONDED THE MOTION. MOTION CARRIED, 7-0. 9. Economic Development Director's Report Jim Thares provided the Economic Development Director's Report. Economic Development Authority Minutes — August 12th, 2020 Page 5 16 Thares stated staff continues to work through Project Gia -Saurus. He noted that it is a complicated proposal and requires a large funding need. Thares noted that UMC has provided staff with minor revisions to their proposed expansion. In September, they would be required to go through the City Council for an amendment to the development agreement and Planned Unit Development. Thares noted some documents and agreements with the EDA would also need to be adjusted, such as the Minnesota Investment Fund (MIF) Grant Agreement and the EDA's companion Advance Funding loan ($300,000 Deferred 2nd Mortgage) to UMC. The intent was to have UMC repay the EDA after the new building is completed. The project completion date is now expected to be June 30, 2021. UMC expects to start the project in October 2020. More discussion between UMC and City Staff would occur, with an update provided to the EDA at a future meeting. Thares mentioned he would continue working with Pat Briggs to find a date that the EDA could tour Rivertown Residential Suites. Thares explained that there were no new prospects on the list, but several had a status update. 10. Closed Session — Consideration of Recessing to Closed Session to Develop or Consider Offers or Counter -Offers for the Purchase or Sale of Real or Personal Property Pursuant to Minnesota Statute 13D.05, Subdivision 3(c)(3). Property Address and PID: Address: 101 Broadway West — PID: #155010052090 Address: 107 Broadway West — PID: #155010052070 Address: 121 Broadway West — PID: #155010052031 JIM DAVIDSON MOVED TO MOVE INTO CLOSED SECONDED THE MOTION. MOTION CARRIED, 7-0. SESSION. JON MORPHEW 11. Adiourn TRACY HINZ MOVED TO ADJOURN THE MEETING AT 7:25 P.M. OLLIE KOROPCHAK-WHITE SECONDED THE MOTION. MOTION CARRIED, 6-0. Recorder: Jacob Thunander Approved: September 9th, Attest: , Economic Development Director Economic Development Authority Minutes — August 12th, 2020 Page 6 1 6